Cash Receipts Internal Control Essentials

October 2013

Topics

• Procedures & Responsibilities

• Safeguarding of Cash Receipts

• Segregation of Duties • Record of Receipt • Restrictive

Endorsement

• Depositing Cash Receipts

• Counterfeit Currency • Debit/Credit Cards • Refunds • Reconciliation

Why are cash receipt internal controls important?

• Prevents mishandling of funds and to safeguard

against loss (via theft or inaccuracy)

• Protects employees from allegations of impropriety by defining responsibilities

“Internal controls are actions taken to make sure the right things happen and the wrong things do not.”

Procedures & Responsibilities

• Established procedures for each funding source • State (IFR) • Research Foundation for SUNY (RF) • University at Buffalo Foundation (UBF)

• Define AND document cash receipt responsibilities of staff

• Ensure staff’s understanding of cash receipts policies and procedures

Safeguarding of Cash Receipts

• Locked safe or lockbox (access should be limited) • Deposit cash frequently (preferably daily; not less

than weekly) • Never keep large amounts of cash on hand, even if

kept in safe or lockbox

Segregation of Duties

• Responsibilities should be split for each level of collections • Receiver/collector of cash • Deposit preparer • Cash reconciler

• Small staff – compensating controls • Additional management supervision • More frequent reconciliation/reviews • Reassignment of responsibilities

Record of Receipt

• Cash must be recorded immediately • Methods:

• Pre-numbered receipts • Cash Receipt Books

• Cash registers • Adequate supervision

• Event tickets • Concerts, lectures, sporting events, etc.

Restrictive Endorsement

• Checks or money orders received should be restrictively endorsed immediately

• Use phrase “For Deposit Only…” • Preferred method - endorsement stamp

Depositing Cash Receipts

• Depositing should be done daily • Reasons for less frequent depositing (no less than once

per week) • Location • Minimal collections • Receipts not in the form of currency/coin

• Use pre-numbered deposit transmittal forms if depositing regularly

• Always deposit “in total” - never use cash receipts for change, petty cash, or refunds

Counterfeit Currency

• Be aware – it happens! • Examine all currency carefully • Take time to process cash transactions • Use counterfeit marking pens on:

• Bills in denominations above $20 • Any bills that look suspicious

• Never pass counterfeit note back to person who passed it to you – contact Campus Police immediately

Debit/Credit Cards

• Procedures should mirror cash receipt internal controls

• Always batch out terminals at end of day • Transmitted batches should always match amounts

on deposit transmittals • Credit/Debit Card Merchant Requirements Policy • Payment Card Industry Data Security Standards (PCI

DSS)

Refunds

• Refunds are never to be made from cash receipts • Should follow appropriate procedures based on

funding source • Should not be made within the first ten (10) days

past the original deposit date • Allows time for processing • Allows time for bank reconciliation

Reconciliation

• Procedures defined and documented • Staff designated (remember segregation of duties) • Performed regularly & timely (at least monthly) • Procedures should include:

• Receipts versus accounting records • Record of receipts matched to cash deposited

Important Links University Documents: State Cash Receipts and Petty Cash Reimbursement Procedures RF Preparing Cash Receipts for Deposit Procedures UBF Deposit Procedures Credit/Debit Card Merchant Requirements Policy Red Flags Identity Theft Prevention Policy Other Documents: NYS Accounting System User Procedures Manual - 3.0210 Internal Controls - Cash Receipts SUNY Audit Guidance - Key Controls Over Cash Receipts Related Links: Cash Receipt Books Order Form State Cash Receipt Transmittal Form Instructions UBF Deposit Transmittal Form RF Cash Receipts Function United States Secret Service – How to Detect Counterfeit Money United States Secret Service – If You Receive a Counterfeit

Contacts • Cash Management

• Mark Mariglia, 645-2620, mm293@buffalo.edu

• Bank Reconciliation & Merchant/Credit Card Officer • Lance Mahalic, 645-2626, lmahalic@buffalo.edu • Patti O’Farrell, 645-2658, pdo2@buffalo.edu

• PCI Compliance • Valerie Dennis, 645-2604, vlb5@buffalo.edu

• Cash Receipts Deposits/Transmittals

• Sean Gardner, 645-2621, spg1@buffalo.edu